the big tax cuts scam

[netmaker]

hi all. no doubt you have all heard the radio advertising over the last year about how the tax free threshold was being trebled from $6000 to $18000. wow. what a generous government right? wrong. what the radio advertising (paid for by us of course) didn't tell you was that the "low income earners tax offset" effectively meant that the tax free threshold was already $16000. they also didn't tell you that they reduced the low income earners tax offset from $1500 to $445. in addition they forgot to mention the tax rate increases for low to middle income earners. previously incomes below $37k were taxed at a maximum rate of 15% (plus medicare levy). that bracket now attracts 19% (plus medicare levy). the next bracket from $37k - $80k used to be taxed at 30% (plus medicare levy), that bracket is now 32.5% (plus medicare levy). brackets over $80k remain unchanged from last year. so, what does it all mean? i have provided some examples of the differences, none of which take the medicare levy surcharge (which has just increased for many) into account.

tax on income
taxable income 2012 2013 tax saving

$25k $1725 $1222 $503

$37k $3985 $3682 $303

$50k $8600 $8297 $303

$80k $18900 $18747 $153

$100000 $26700 $26447 $253

$150000 $46450 $45697 $753

as can be seen the cuts don't amount to much and despite government rhetoric about directing the cuts at low to middle income earners, the biggest winners are the big end of town.

before all you big wigs start cheering tho, don't forget the fact that now the government has sucked you into private health insurance with its stick and carrot approach, the stick has gotten bigger and they are now removing the carrot...

[Muddy Toes]

as can be seen the cuts don't amount to much and despite government rhetoric about directing the cuts at low to middle income earners, the biggest winners are the big end of town.

before all you big wigs start cheering tho, don't forget the fact that now the government has sucked you into private health insurance with its stick and carrot approach, the stick has gotten bigger and they are now removing the carrot...

I honestly don't think anyone towards the bottom of your list would be cheering too much mate. Yeah it's the biggest dollar saving on the table but it's far from any sort of a 'saving' now is it?

[netmaker]

I honestly don't think anyone towards the bottom of your list would be cheering too much mate. Yeah it's the biggest dollar saving on the table but it's far from any sort of a 'saving' now is it?

therein lies the irony. for someone on 150k, $753 is a pittance. for someone on say 60k their tax saving will be lucky to cover the increase on their power bills for the year...

[Muddy Toes]

I think the middle and lower tax brakets are entitled to a fair share of savings, grants and rebates that the higher tax brackets are excluded from. I'm in no way saying that those concessions are enough to stop the everyday struggle for a lot of families but I don't think that people in the higher tax brackets are ' winning' so to speak if we look at it as a percentage of one's taxable income as it is intended.

Hours spent at work.........working nearly half of your day before a single cent goes towards your bank account, I don't think that's winning.

[netmaker]

I think the middle and lower tax brakets are entitled to a fair share of savings, grants and rebates that the higher tax brackets are excluded from. I'm in no way saying that those concessions are enough to stop the everyday struggle for a lot of families but I don't think that people in the higher tax brackets are ' winning' so to speak if we look at it as a percentage of one's taxable income as it is intended.

Hours spent at work.........working nearly half of your day before a single cent goes towards your bank account, I don't think that's winning.

my point exactly. for all the hooha the government made about tax savings, to most it will not come close to matching the increased costs of living. likewise when they were touting the new "payments for families" they failed to mention that it was at the expense of the new (now defunct after only 3 years) education tax offset. it annoys me to no end that they spend our tax dollars telling us how great they are but fail to give us the big picture. so many people I have spoken to thought they were getting a great deal from the increase to the threshold based on this misleading advertising. similarly I get annoyed at the private health insurance ads making out that everyone who doesn't have health insurance will pay more tax. I have a constant stream of customers who don't require private health cover for tax purposes that were misled by this advertising and they generally opt out as soon as they are informed of it. I thought there were supposed to be "truth in advertising" laws to protect consumers. why is it that government and health insurance companies seem to be exempt?

[astro66]

all i know is im down 6k this year thanks to the changes to living away from home allowances...

[Gazza]

As you stated earlier NetMan , the Lab-Feds:o TRY 2 give a tax-"handout"? & the state-gov Lib-Feral vultures take-back!! 01/07/13

e.g. electricity 20% increase
Qld L-NP , Cost of living DECREASE , nope

[lampuki]

Removal of the carbon tax will directly assist in reducing electricity bills.

[Mike Delisser]

my point exactly. for all the hooha the government made about tax savings, to most it will not come close to matching the increased costs of living. likewise when they were touting the new "payments for families" they failed to mention that it was at the expense of the new (now defunct after only 3 years) education tax offset. it annoys me to no end that they spend our tax dollars telling us how great they are but fail to give us the big picture. so many people I have spoken to thought they were getting a great deal from the increase to the threshold based on this misleading advertising. similarly I get annoyed at the private health insurance ads making out that everyone who doesn't have health insurance will pay more tax. I have a constant stream of customers who don't require private health cover for tax purposes that were misled by this advertising and they generally opt out as soon as they are informed of it. I thought there were supposed to be "truth in advertising" laws to protect consumers. why is it that government and health insurance companies seem to be exempt?
Unfortunately political parties and Governments are exempt from truth in advertising laws.

I'm not sure your examples cover everyone Netmaker, where did you get those schedules you posted mate? Or is there somewhere can I see the full figures? My wife and daughter both work in part time jobs and both are a long way in front this year.


I laugh when I see the "I-select" health insurance add where the boss find out one of his call center staff doesn't have health insurance and will pay extra tax. He tells him to go back to his desk...phone himself up and get a quote for the cover that would best suit him. As if anyone on the phones at a call center would be on over $88k pa single or $176k pa a couple.
Cheers

[netmaker]

all i know is im down 6k this year thanks to the changes to living away from home allowances...

living away from home allowances are one of the most misunderstood areas of taxation in existence.

firstly, living away from home allowances are included in the fringe benefits tax regime, ie. the employer pays any tax on the provided benefit (same as with company cars). until october last year LAFHA was an exempt fringe benefit which means that the employer did not have to pay tax on the allowance provided to the employee. they have always been tax-free income in the hands of the employee providing the amount paid was less than the taxation commissioners deemed "reasonable amounts". where people have been getting it wrong is that they have been claiming that "reasonable amount" (or the difference between what they are paid and that amount) on their tax returns as expenditure. this has been done by many tax people too which is of much concern. the law states that you are only entitled to claim what you are out of pocket. if your employer pays you say $100 per day away you are not entitled to claim anything over and above that unless you have records to show you spent more than $100 per day.
put simply:

1. the reasonable amounts are only there to reduce the onus of substantiation.
2. they only apply to taxpayers who are paid an allowance.
3. if you do not receive an allowance you need to record all costs involved with your living away from home activities (rent, food etc.)

what has been occurring is people who are living at camps and being fed and lodged at no cost are then claiming on their returns figures upwards of $150 per day.

can anybody think of 1 reason the government would let you claim expenses that you are not actually incurring?

the only reason the changes in the law should affect employees is that the employer is choosing not to cop the fringe benefits tax on the provided benefit and as such has opted to reduce the benefit to the employee. it should not affect employees tax returns as such.

if you want to know more, see the attached link: http://www.ato.gov.au/Business/Bus/Living-away-from-home-allowance-fringe-benefits/?default=&page=1

[netmaker]

Unfortunately political parties and Governments are exempt from truth in advertising laws.

I'm not sure your examples cover everyone Netmaker, where did you get those schedules you posted mate? Or is there somewhere can I see the full figures? My wife and daughter both work in part time jobs and both are a long way in front this year.

those figures come from my tax software mike but the tax rates for this and previous years are available at www.ato.gov.au in the calculators section. they are correct to the $ and the best off your wife and daughter could be (assuming low incomes for part timers) is $503 each for the year.

[Da-Jew-Man]

Very interesting.
Other points:
- Disability scheme costs
- Petrol costs
- Electricity costs
- and RATES

Go back and check what you were paying for rates/water etc 5 years ago and see what you pay now and be ready for the shock.
Oh and see what you get for your rates.
Not only do we have some of the highest paid federal politicians, but now the state ones have jumped in also and guess what the local gov are linked.
Absolute joke, anywhere else in the world there would be riots.
Time for a panadol.

[netmaker]

Unfortunately political parties and Governments are exempt from truth in advertising laws.

I'm not sure your examples cover everyone Netmaker, where did you get those schedules you posted mate? Or is there somewhere can I see the full figures? My wife and daughter both work in part time jobs and both are a long way in front this year.

my bad. i should have included the tax on $20542. this year if you earned less than $20542 you pay no tax. if you earned $20542 last year it would have cost you $795.10 so if your wifes/daughters incomes were below this they could be a bit better off.

[netmaker]

Removal of the carbon tax will directly assist in reducing electricity bills.

believe that when i see it...

[lucee81]

Why are we all not paying a standard percentage of tax. So if you earn $100 you pay 10% if you earn $100,000 you pay 10%. Wasn't this meant to be rolled out with gst?? That would bring my tax bill down over $50,000 for the year. I could have had my new car that I've worked for instead of the junkie down the road or the boat person that doesn't care for our country getting some of that money. You may call me small minded but I leave my family every other week to better us as a family and a country not for the ingrates. Stop all unnecessary funding and admin spending. Make the pollies liable for their actions. Get rid off all pensions and you will see how many leave parliament, then you will only get the people that care for our country running it. Take a mayor/councillor when did it become a full time job that earns over $200,000 a year plus expenses and cars? Councils have ceo's that run the council.

[TimiBoy]

On the plus side I find the Tax Department to be very nice to deal with. They don't set Policy though.

Funny, the stuff you point out Netmaker has been in the Public Sphere since it first came out, yet the Media wanted nothing of it. If you tried to wave it in the face of your average schmoe, he'd just tell you to &^%* off and say "Labor is for the Worker."

[Mike Delisser]

Maybe less as they're both earning under $25k pa. I know there're many expenses to consider but with our power averaging $310 a 1/4 I recon in our case the increase in the TFT would be close to hitting it's intended mark........at the moment anyway.

Netmaker I'm interested in you comments re allowances.
You must be familiar with tax ruling TR2004/6
http://law.ato.gov.au/atolaw/view.htm?docid=TXD/TD201117/NAT/ATO/00001
I know of many who flaunt the overtime meal allowance deduction and claim the full "reasonable amount" ($26.45), some claim it for well over 150 days pa. Multiply that by over 200 employees at our site alone and it must add up to some serious coin. I tell them the ATO will get on to them one day but it hasn't happened yet, perhaps it never will.

Netmaker can you tell me how wide spread the rorting of this deduction is?
Is it the norm and am I stupid (or too honest) if I don't join them?
Cheers

[cobiaman]

Why are we all not paying a standard percentage of tax. So if you earn $100 you pay 10% if you earn $100,000 you pay 10%. Wasn't this meant to be rolled out with gst?? That would bring my tax bill down over $50,000 for the year. I could have had my new car that I've worked for instead of the junkie down the road or the boat person that doesn't care for our country getting some of that money. You may call me small minded but I leave my family every other week to better us as a family and a country not for the ingrates. Stop all unnecessary funding and admin spending. Make the pollies liable for their actions. Get rid off all pensions and you will see how many leave parliament, then you will only get the people that care for our country running it. Take a mayor/councillor when did it become a full time job that earns over $200,000 a year plus expenses and cars? Councils have ceo's that run the council.

Stop trying to make sense lucas, no-one likes you when your normal...

[fish'n'chippy]

Hours spent at work.........working nearly half of your day before a single cent goes towards your bank account, I don't think that's winning.

I think we're pretty much all the same mate
I work 2 full days each week for the government coffers, 2 days to pay the running expenses (food, fuel, insurances, rates, power, etc....etc) and whatever I earn on Friday I can spend on the fun stuff.

Only difference is that on the tax days I start late, finish early and have a longer smoko......I'm no busting my guts for any of those thieving bastards who couldn't work in an iron lung.

Also have to agree with Lucee's comment, if you got rid of the golden handshakes you'd also get rid of a lot of pollies.......win win......now how do we get one of them to stand up in parliament and push for this change????

Snowball's chance in Hell

G

[lucee81]

Stop trying to make sense lucas, no-one likes you when your normal...

Careful now people are agreeing with me.

[fish'n'chippy]

Careful now people are agreeing with me.

I don't think I qualify as "people", cantankerous old €&#% would be more accurate

[astro66]

As to my understanding of the living away allowance was in my circumstance i could claim a fair and reasonable amount for food and accomodation (280 a night last year, which is set each year by the ato) WITHOUT reciepts......
This year it is a fair and reasonable amount on food without reciepts(will be set at 250 a week this year)and accomodation will have all reciepts....(have been doing it for 10 years...audited approx 6 years ago by the ato and they had no problems with it)
Now im away from home approx 46weeks of the year....my home costs me 800$ a week not to live in it....my company is now stopping or cutting back all allowances ...this is the end of working away for me and a lot of people in the same boat..

[Mike Delisser]

Astro has the ATO changed what you can legally claim? Or have they changed what you can legally claim without reciepts?


You'll find some info about those ATO rulings on the link I posted above for Netmaker.
Cheers

[netmaker]

Maybe less as they're both earning under $25k pa. I know there're many expenses to consider but with our power averaging $310 a 1/4 I recon in our case the increase in the TFT would be close to hitting it's intended mark........at the moment anyway.

Netmaker I'm interested in you comments re allowances.
You must be familiar with tax ruling TR2004/6
http://law.ato.gov.au/atolaw/view.htm?docid=TXD/TD201117/NAT/ATO/00001
I know of many who flaunt the overtime meal allowance deduction and claim the full "reasonable amount" ($26.45), some claim it for well over 150 days pa. Multiply that by over 200 employees at our site alone and it must add up to some serious coin. I tell them the ATO will get on to them one day but it hasn't happened yet, perhaps it never will.

Netmaker can you tell me how wide spread the rorting of this deduction is?
Is it the norm and am I stupid (or too honest) if I don't join them?
Cheers

hi mike. yes, the law allows up to that amount to be claimed per bona fide overtime meal allowance without records. when I prepare returns I ask what amount the taxpayer spends on an overtime meal on average and claim that amount (most are around $20). for those that take their own meals I encourage them to claim up to the amount paid (but not more) which makes the allowance effectively tax free. those that want to claim the full $26.45 per meal (there are a few), I encourage to keep some receipts in the event of an audit. it all comes down to being reasonable. one of the key points about allowances is as on the ruling you have referred to, namely:

Claim must be allowable - A deduction claim cannot exceed the amount actually incurred for work-related purposes. The payment of an allowance does not of itself allow a deduction to be claimed

[netmaker]

As to my understanding of the living away allowance was in my circumstance i could claim a fair and reasonable amount for food and accomodation (280 a night last year, which is set each year by the ato) WITHOUT reciepts......
This year it is a fair and reasonable amount on food without reciepts(will be set at 250 a week this year)and accomodation will have all reciepts....(have been doing it for 10 years...audited approx 6 years ago by the ato and they had no problems with it)
Now im away from home approx 46weeks of the year....my home costs me 800$ a week not to live in it....my company is now stopping or cutting back all allowances ...this is the end of working away for me and a lot of people in the same boat..

astro,

usually a lafha should not appear on your payment summary as it is covered by fbt law (as is now reflected in your companys decision to cut back on allowances). if, however the allowance has been shown on your payment summary you are entitled to claim up to the reasonable amount against that allowance without records - but not more than the total allowance. to claim in excess of the allowance received you are required to hold records of all the costs claimed (not just the excess over the allowance). if you have been claiming more than the allowance received and you were audited that of itself is not confirmation that your claim is legitimate. public servants have also been known to make errors...

the following shows that the lafha is effectively being shifted from the fbt regime to the income tax regime:

The requirement to substantiate expenditure against the allowance will come into effect 1st October 2012 for ALL employees.
To facilitate the substantiation requirement, the administration of the allowance will transition to the income tax system. This will have the following consequences:

The allowance will be assessable income to the employee and reported on their year-end payment summary;
Provided the eligibility criteria is met, the employee will be able to deduct expenditure for accommodation and food on their income tax return;
Only food expenses in excess of $110 per adult and $55 per child (under 12) will be deductible;
To relieve the compliance burden, substantiation for food expenses will not be required unless the expenses exceed an amount specified by the Commissioner (amount yet to be specified);
Accommodation expenses can be substantiated by lease agreements, mortgage documents or other accommodation receipts.
again, this highlights the fact that the relief from substantiation is only in relation to an allowance received.